Legislature(2017 - 2018)GRUENBERG 120

02/20/2018 03:15 PM STATE AFFAIRS

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03:19:55 PM Start
03:20:47 PM HJR26
03:54:32 PM Confirmation Hearing(s)|| Confirmation Hearing(s)
04:01:45 PM Presentation: Indirect Expenditure Hearing
04:52:27 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Indirect Expenditure Hearing TELECONFERENCED
Heard & Held
+ Confirmation Hearing: Leslie Ridle TELECONFERENCED
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
             HOUSE STATE AFFAIRS STANDING COMMITTEE                                                                           
                       February 20, 2018                                                                                        
                           3:19 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Jonathan Kreiss-Tomkins, Chair                                                                                   
Representative Gabrielle LeDoux, Vice Chair                                                                                     
Representative Chris Tuck                                                                                                       
Representative Adam Wool                                                                                                        
Representative Chris Birch                                                                                                      
Representative DeLena Johnson                                                                                                   
Representative Gary Knopp                                                                                                       
MEMBERS ABSENT                                                                                                                
Representative Andy Josephson (alternate)                                                                                       
Representative Chuck Kopp (alternate)                                                                                           
COMMITTEE CALENDAR                                                                                                            
HOUSE JOINT RESOLUTION NO. 26                                                                                                   
Proposing amendments to  the Constitution of the  State of Alaska                                                               
relating  to  the membership  and  actions  of the  Redistricting                                                               
Board and  relating to district boundaries  and the establishment                                                               
of a nonpartisan statewide district map.                                                                                        
     - HEARD & HELD                                                                                                             
CONFIRMATION HEARING(S)                                                                                                         
     - CONFIRMATION(S) ADVANCED                                                                                                 
PRESENTATION: INDIRECT EXPENDITURE HEARING                                                                                      
     - HEARD                                                                                                                    
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HJR 26                                                                                                                  
SHORT TITLE: CONST. AM: REDISTRICTING;BOARD MEMBERSHIP                                                                          
SPONSOR(s): REPRESENTATIVE(s) GARA                                                                                              
01/08/18       (H)       PREFILE RELEASED 1/8/18                                                                                
01/16/18       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/16/18       (H)       STA, JUD, FIN                                                                                          
01/22/18       (H)       SPONSOR SUBSTITUTE INTRODUCED                                                                          
01/22/18       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/22/18       (H)       STA, JUD, FIN                                                                                          
02/20/18       (H)       STA AT 3:15 PM GRUENBERG 120                                                                           
WITNESS REGISTER                                                                                                              
REPRESENTATIVE LES GARA                                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented SSHJR 26, as prime sponsor.                                                                    
JUSTIN LEVITT, Professor                                                                                                        
Loyola Law School                                                                                                               
Los Angeles, California                                                                                                         
POSITION STATEMENT:  Testified during the hearing on SSHJR 26.                                                                
MARGO WARING, League of Women Voters of Juneau (LWVJ)                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the hearing on SSHJR 26.                                                                
LESLIE RIDLE, Commissioner Designee                                                                                             
Department of Administration (DOA)                                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified as appointed commissioner of the                                                               
Department of Administration (DOA).                                                                                             
DAN STICKEL, Chief Economist                                                                                                    
Tax Division                                                                                                                    
Department of Revenue (DOR)                                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Co-presented an overview of DOR's Indirect                                                               
Expenditure Report for fiscal years 2011-2015 (FY 11-15), with                                                                  
the use of a PowerPoint presentation.                                                                                           
KY CLARK, Economist                                                                                                             
Tax Division                                                                                                                    
Department of Revenue (DOR)                                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Co-presented an overview of DOR's Indirect                                                               
Expenditure Report for fiscal years 2011-2015 (FY 11-15), with                                                                  
the use of a PowerPoint presentation.                                                                                           
ALEXEI PAINTER, Fiscal Analyst                                                                                                  
Legislative Finance Division (LFD)                                                                                              
Legislative Affairs Agency (LAA) Juneau, Alaska                                                                                 
POSITION  STATEMENT:   Presented an  overview of  the Legislative                                                             
Finance Division's  indirect expenditure reports with  the use of                                                               
a PowerPoint presentation.                                                                                                      
ACTION NARRATIVE                                                                                                              
3:19:55 PM                                                                                                                    
CHAIR  JONATHAN KREISS-TOMKINS  called  the  House State  Affairs                                                             
Standing   Committee    meeting   to    order   at    3:19   p.m.                                                               
Representatives  Birch, Johnson,  Knopp, and  Kreiss-Tomkins were                                                               
present at the call to  order.  Representatives LeDoux, Tuck, and                                                               
Wool arrived as the meeting was in progress.                                                                                    
        HJR 26-CONST. AM: REDISTRICTING;BOARD MEMBERSHIP                                                                    
3:20:47 PM                                                                                                                    
CHAIR KREISS-TOMKINS  announced that the first  order of business                                                               
would be  SPONSOR SUBSTITUTE FOR  HOUSE JOINT RESOLUTION  NO. 26,                                                               
Proposing amendments to  the Constitution of the  State of Alaska                                                               
relating  to  the membership  and  actions  of the  Redistricting                                                               
Board and  relating to district boundaries  and the establishment                                                               
of a nonpartisan statewide district map.                                                                                        
3:20:58 PM                                                                                                                    
REPRESENTATIVE  LES  GARA,  Alaska State  Legislature,  as  prime                                                               
sponsor, presented SSHJR 26.   He noted that a proposed committee                                                               
substitute  (CS)  for  SSHJR 26,  Version  30-OS0155\N,  Bullard,                                                               
1/31/18  [included in  the committee  packet and  referred to  as                                                               
Version   N]   would   attempt   to   eliminate   politics   from                                                               
redistricting, which is  also referred to as  gerrymandering.  He                                                               
said that roughly  ten states have adopted  a non-partisan method                                                               
of  drawing district  lines  so  as not  to  favor  one party  or                                                               
another.   He  maintained that  both parties  have tried  to take                                                               
advantage of the redistricting process.                                                                                         
3:22:49 PM                                                                                                                    
JUSTIN  LEVITT,   Professor,  Loyola  Law  School,   relayed  his                                                               
experience in the  field of redistricting and voting  rights.  He                                                               
testified that  he agrees  with Representative  Gara's assessment                                                               
that neither  party has a  monopoly on abusing  the redistricting                                                               
process when  possible.  He  stated that in most  states, sitting                                                               
legislators  draw  both  their   own  district  lines  and  where                                                               
applicable, districts  of members of  Congress.  He said  that it                                                               
is often legislative leadership  that wields redistricting power,                                                               
not the  "rank and file" legislators.   He reported that  in many                                                               
states,  leadership  is at  least  tempted  to use  redistricting                                                               
power as a cudgel against both  members of the opposing party and                                                               
occasionally against members of their own party.                                                                                
MR.  LEVITT  continued  by  saying that  the  process  is  rarely                                                               
transparent; because  redistricting can be very  personal when it                                                               
is  pursued  as an  exercise  in  raw  partisan power,  it  often                                                               
appears  to be  overflowing with  ill will,  creating significant                                                               
conflict   among  legislators   that   carries   over  into   the                                                               
legislative sessions.   He maintained that when  this happens, it                                                               
creates  substantial  cynicism  among  the public,  even  if  the                                                               
process  did not  actually put  personal  and partisan  interests                                                               
ahead of  the public interest.   He  said that in  his experience                                                               
and in  the experience of many  other redistricting commentators,                                                               
it often  appears to the  public eye  that the system  is rigged,                                                               
that is,  members exercising  the power granted  to the  state to                                                               
act on behalf  of all its constituents but  exercising that power                                                               
to benefit just a few.                                                                                                          
MR.  LEVITT  offered  his  belief  that  the  U.S.  is  the  only                                                               
industrialized  western  democracy  that allows  those  with  the                                                               
greatest potential  for conflict  of interest  to draw  their own                                                               
electoral  district lines.    He said  that  many countries  have                                                               
observed the  U.S. practice and  determined that they can  find a                                                               
better way.                                                                                                                     
3:26:59 PM                                                                                                                    
MR.  LEVITT relayed  that a  few states,  including Alaska,  have                                                               
taken  a   different  approach   to  drawing   state  legislative                                                               
districts.  Connecticut  and Maine allow the  legislature to draw                                                               
redistricting lines  that have supermajority  requirements, which                                                               
can increase  the likelihood  of a more  bipartisan outcome.   He                                                               
reported  that   seven  states  -  Arkansas,   Colorado,  Hawaii,                                                               
Missouri, New  Jersey, Ohio, and Pennsylvania  - have established                                                               
commissions  to  draw  redistricting   lines  but  allow  elected                                                               
officials  to serve  on  those commissions.    In most  instances                                                               
these  bodies are  also structured  in  a manner  designed to  be                                                               
bipartisan; therefore, they differ from  the legislature.  In two                                                               
other states  - Iowa  and New  York -  there are  advisory bodies                                                               
with   substantial  independence   from   the  legislature,   but                                                               
theoretically they are subject to  legislative override.  He said                                                               
that New  York's system is new  for the year 2020,  so it remains                                                               
to be seen how it will work.   Iowa's experience in the last four                                                               
decades shows that its independent  body substantially drives the                                                               
process and  has never been  overridden by the  legislature, even                                                               
though the legislature has that authority.                                                                                      
MR.  LEVITT   referred  to  several   other  states   -  Arizona,                                                               
California, Idaho, Montana, Washington, and  as of 1998, Alaska -                                                               
that  have   asked  commissions   with  substantial   amounts  of                                                               
independence  from the  legislature  to  draw legislative  lines.                                                               
These  states  are  often   considered  leaders  of  establishing                                                               
redistricting processes in that  the processes correspond more to                                                               
public interest than  to partisan or private  interests.  Members                                                               
of  the commissions  in  all  these states  must  not be  current                                                               
sitting state  legislators or  other specified  public officials;                                                               
the list  varies from state  to state.   He said that  members of                                                               
the commissions  of these states  are precluded from  running for                                                               
office  in the  districts for  which  they have  drawn lines,  at                                                               
least  for  a  few  years.     In  the  states  with  independent                                                               
commissions, all but  one are designed so that  the membership of                                                               
the commission is  balanced in a bipartisan fashion.   He offered                                                               
that  California, in  addition, provides  specific membership  on                                                               
the commission  for those who  are affiliated with  neither major                                                               
MR. LEVITT relayed that the one  state that does not, at present,                                                               
have  a  directly  and   intentionally  bipartisan  structure  is                                                               
Alaska.   States  have  created  a diverse  array  of options  to                                                               
perform legislative and  congressional redistricting; even within                                                               
the rough categories described,  there is substantial variance in                                                               
how each  structure is designed  and substantial variance  in how                                                               
each works in  practice.  He added that some  of the systems work                                                               
quite well; some  work fairly well; and some  work fairly poorly.                                                               
Each  likely  could be  improved  -  sometimes incrementally  and                                                               
sometimes exponentially.                                                                                                        
3:30:53 PM                                                                                                                    
MR. LEVITT  maintained that he  firmly believes that there  is no                                                               
single correct "cookie  cutter" answer for every  state; there is                                                               
no "magic  bullet" that  can or  should be  uniformly implemented                                                               
everywhere and in  the same way, without  concern for demography,                                                               
history, or political  context.  He expressed  that Iowa's system                                                               
works  well for  Iowa but  would  not work  well for  California.                                                               
California's system works well for  California but is unnecessary                                                               
for Idaho.  Idaho's system works  well for Idaho but isn't likely                                                               
to work  well in New  York.  He  asserted that each  system, even                                                               
when  it  functions  well  for  its  own  state,  can  likely  be                                                               
3:31:39 PM                                                                                                                    
MR. LEVITT  related that  the present system  in Alaska  has many                                                               
elements to commend it, but it,  too, can be improved.  He opined                                                               
that the process  was improved in 1998, when  control passed from                                                               
the  governor alone  to the  current reapportionment  board.   He                                                               
expressed his belief  that Version N of SSHJR 26  would make even                                                               
greater  advancements to  the process.   At  present, Alaska  has                                                               
some safeguards  for the public.   Those  who draw the  lines may                                                               
not  be  public employees  or  officials  at  the time  they  are                                                               
appointed or throughout the tenure  of their appointments.  There                                                               
are provisions for  geographic diversity; there must  be a member                                                               
from each judicial district on  the board.  There was substantial                                                               
transparency in  the manner that  redistricting was  conducted in                                                               
the 2000 and 2010 redistricting cycles.                                                                                         
MR.   LEVITT   said   that  in   theory,   appointment   to   the                                                               
reapportionment board  is to be  made without regard  to partisan                                                               
political affiliation; the members of  the board are not supposed                                                               
to be partisan.  He pointed  out that currently, four out of five                                                               
members of the reapportionment board  are themselves appointed by                                                               
officials elected  to political positions;  it is often  the case                                                               
that the  officials of one  political party  will do most  of the                                                               
appointing.    He  explained that  when  elected  officials  with                                                               
partisan allegiance  make the appointments,  even while  the text                                                               
precludes appointment regarding  partisan affiliation, the public                                                               
may  be  misled into  perceiving  that  the  board itself  has  a                                                               
partisan slant.                                                                                                                 
MR. LEVITT  stated that Version  N would continue  Alaska's hardy                                                               
tradition of  a redistricting body distinct  from the legislature                                                               
and  continue   the  tradition   of  precluding   current  public                                                               
employees and  officials.   In addition, it  would add  a welcome                                                               
measure   of  incremental   independence  by   precluding  former                                                               
political  party operatives  and  former  elected officials  from                                                               
serving  on  the board.    He  maintained  that Version  N  would                                                               
prevent  someone  from retiring  from  a  legislative office  and                                                               
serving on the board  the next day.  It would  also add a measure                                                               
of partisan balance  to the reapportionment body  itself with two                                                               
members from each  of the major parties and  several members from                                                               
neither.  He opined that  this would more closely approximate the                                                               
structure  of independent  commissions in  other states,  such as                                                               
Arizona, Idaho,  Montana, and Washington; he  noted the political                                                               
and partisan  diversity of this  group of  states.  He  opined it                                                               
would  strengthen the  measures of  incremental independence  and                                                               
incremental balance;  it would strengthen the  Alaskans' faith in                                                               
the redistricting process.                                                                                                      
3:35:16 PM                                                                                                                    
MR.  LEVITT relayed  that  Version N  also  would strengthen  the                                                               
redistricting process's  focus on criteria that  benefit Alaskans                                                               
- retaining  the state's very strong  protections for communities                                                               
of interest  - and thus,  legislators would really know  who they                                                               
are representing,  and that  would be felt  and perceived  by the                                                               
public.  The criteria would  still be embodied in the requirement                                                               
that districts contain  relatively integrated socioeconomic areas                                                               
but would  add specific  language that  would preclude  drawing a                                                               
map to  unduly favor a  party or  candidate.  He  maintained that                                                               
aspect being important both for the  substance of the map and the                                                               
public perception of  it.  He said that the  Alaska Supreme Court                                                               
has emphatically  enforced the  redistricting provision  of state                                                               
law  and  that he  expects  it  would  enforce the  provision  of                                                               
Version N,  if it became  law, which should give  Alaska citizens                                                               
incremental confidence that the process is defined for them.                                                                    
MR.  LEVITT stated  that he  has  focused his  testimony on  fair                                                               
process, not  results, which  he said  is appropriate.   Alaskans                                                               
are diverse with various protected  racial and ethnic communities                                                               
and many citizens who prefer  one of the major political parties.                                                               
He  offered  that there  is  a  fierce independent  streak  among                                                               
Alaskans; some  citizens prefer neither  major party.   Districts                                                               
that  are drawn  through a  fair process  will inevitably  in any                                                               
given cycle or  election end up creating  some natural advantages                                                               
for certain candidates; it is  impossible to remove all political                                                               
results from the redistricting process.   However, he opined that                                                               
a fair process - one designed  to be independent of the candidate                                                               
running in  the districts  drawn and one  with natural  balance -                                                               
will  give  Alaskans  increased  confidence  that  the  electoral                                                               
contests,  whatever  their  outcomes,   have  not  been  unfairly                                                               
tilted.  He  expressed his belief that Version  N brings Alaska's                                                               
process  closer to  that  ideal and  moving  in an  incrementally                                                               
positive direction.                                                                                                             
3:38:46 PM                                                                                                                    
REPRESENTATIVE LEDOUX  moved to adopt  the proposed CS  for SSHJR                                                               
26,  Version  30-LS0155\N,  Bullard,   1/31/18,  as  the  working                                                               
document.   There being  no objection, Version  N was  before the                                                               
3:39:06 PM                                                                                                                    
REPRESENTATIVE  GARA  relayed  that  there  are  six  changes  in                                                               
Version N.   He referred  to Section 1 of  Version N, on  page 1,                                                               
lines  8-10, which  read, "The  map may  not be  drawn to  unduly                                                               
favor  a political  party, and  a district  may not  be drawn  to                                                               
unduly favor a political party  or candidate."  He mentioned that                                                               
the  language was  recommended  by  Mr. Levitt  and  was used  in                                                               
Hawaii's statutes.                                                                                                              
3:39:57 PM                                                                                                                    
REPRESENTATIVE LEDOUX asked for  the difference between "favoring                                                               
a political party" and "unduly favoring a political party."                                                                     
REPRESENTATIVE GARA  responded that could be  amended; the intent                                                               
is to  not favor a  political party [through redistricting].   He                                                               
stated that there are districts  that favor the Democratic Party,                                                               
the   Republican  Party,   the   Green  Party,   or  the   Alaska                                                               
Independence  Party (AIP);  by  virtue  of the  way  even a  non-                                                               
partisan redistricting map  is drawn, not every  district will be                                                               
fifty-fifty.  He offered that  technically a district may favor a                                                               
[political] party, but the intent  of the proposed legislation is                                                               
to avoid  unfairly favoring  a party; the  map should  be written                                                               
such that it does not unduly, unwarrantedly favor a party.                                                                      
REPRESENTATIVE LEDOUX asked if the  language might be interpreted                                                               
as the  map may not be  drawn with the intention  of favoring one                                                               
party or another.                                                                                                               
REPRESENTATIVE GARA  answered, "Yes,  the whole  map."   He added                                                               
that the  statewide map is  intended to be nonpartisan,  with the                                                               
recognition that one  district or another may favor  one party or                                                               
REPRESENTATIVE  LEDOUX restated  Representative Gara's  answer by                                                               
saying,  "It may  end  up that  way, but  that  shouldn't be  the                                                               
intention of  how you  draw the  whole map  or even  the district                                                               
REPRESENTATIVE GARA replied, "That's true."                                                                                     
REPRESENTATIVE GARA  referred to Section  2, on page 2,  lines 4-                                                               
18, and relayed  that the number of members  on the redistricting                                                               
board  has changed  over the  years;  under Version  N, it  would                                                               
consist  of seven  members -  two from  the party  with the  most                                                               
votes in the  prior election, two from the party  with the second                                                               
most votes,  and because most  voters in Alaska  are independent,                                                               
three  members who  are independent.   The  first four  political                                                               
party members would choose the three independent members.                                                                       
REPRESENTATIVE GARA referred to Section  4, on page 3, lines 6-7,                                                               
and  relayed  that  there had  been  language  banning  political                                                               
contributions  by  those  appointed  to  the  board;  Mr.  Levitt                                                               
explained  that  might  be unconstitutional;  therefore,  it  was                                                               
removed.  He added that with  the four party members choosing the                                                               
three independent  members, the  political leanings of  the three                                                               
would become evident.                                                                                                           
REPRESENTATIVE GARA  referred to Section  4, page 3,  lines 9-11,                                                               
which states that the four  party members would appoint the three                                                               
independent nonpartisan members.                                                                                                
REPRESENTATIVE GARA referred  to Section 4, page  3, lines 13-21,                                                               
and explained that  if the four party members can't  agree on the                                                               
three  independent  members by  a  certain  deadline, the  Alaska                                                               
Supreme Court would appoint the three independent members.                                                                      
REPRESENTATIVE GARA relayed  that Section 6, on page  4, lines 1-                                                               
3, contains conforming language.                                                                                                
3:43:53 PM                                                                                                                    
REPRESENTATIVE TUCK asked if "independent"  refers to a member of                                                               
the Alaska Independence  Party or to someone  who is [registered]                                                               
undeclared nonpartisan.                                                                                                         
REPRESENTATIVE GARA explained that the  three members who are not                                                               
members of the two major parties are non-party affiliated.                                                                      
REPRESENTATIVE  LEDOUX referred  to  Section 4  (d),  on page  3,                                                               
lines  6-8,  and   asked  whether  a  person   appointed  to  the                                                               
redistricting board  is required  to have  never been  elected to                                                               
office.   She asked  whether someone elected  20 years  ago would                                                               
not be allowed to serve on the board currently.                                                                                 
REPRESENTATIVE GARA  responded that  Version N would  allow local                                                               
officials  to  be  appointed,  since in  Alaska  they  are  often                                                               
nonpartisan.     He  relayed  that  state   and  federal  elected                                                               
officials are usually  affiliated with one party or  another.  He                                                               
said he  is open to an  amendment but feels that  these officials                                                               
should not be on the redistricting board.                                                                                       
REPRESENTATIVE  LEDOUX   expressed  that  she   understands  that                                                               
reasoning for  the nonpartisan  members, but  not for  the [four]                                                               
partisan members, because they are supposed to be partisan.                                                                     
REPRESENTATIVE GARA  stated that  he is  amenable to  a committee                                                               
change on  that provision.  In  either case, the result  would be                                                               
two members  from each party  and three independent  members, who                                                               
will be the "power brokers" on the board.                                                                                       
3:46:50 PM                                                                                                                    
REPRESENTATIVE TUCK referred to page  2, lines 16-18, which read,                                                               
"three  members  who are  not  registered  as affiliated  with  a                                                               
political party  and who have  not been registered  as affiliated                                                               
with  a political  party within  the  preceding ten  years".   He                                                               
expressed  his understanding  that it  does not  preclude someone                                                               
who only has been a registered voter for five years.                                                                            
REPRESENTATIVE GARA replied that there  is a requirement that the                                                               
member  would  have  to  have  voted  in  the  last  few  general                                                               
elections.   He agreed that  someone who  has been in  Alaska for                                                               
six  years, if  he/she has  been independent  for the  entire six                                                               
years, would qualify for appointment to the board.                                                                              
3:47:50 PM                                                                                                                    
REPRESENTATIVE LEDOUX referred to Section  2, on page 2, lines 5-                                                               
6, which  read, "members, all of  whom shall be residents  of the                                                               
State  and  registered voters  who  have  voted  in each  of  the                                                               
previous four state general and  primary elections".  She offered                                                               
the scenario  of a  person selected  for the  board in  2017, who                                                               
would  have  had  to  have  voted  in  the  general  and  primary                                                               
elections in 2016 and 2014.   She suggested that some of the most                                                               
partisan people  are the ones  who vote in primaries;  she asked,                                                               
"If  you're actually  trying to  eliminate  partisanship ...  why                                                               
would you make voting in a primary mandatory?"                                                                                  
REPRESENTATIVE  GARA  responded  that he  welcomes  an  amendment                                                               
eliminating "primary  elections."   He reiterated that  since the                                                               
two   Democrats  and   two   Republicans   would  appoint   three                                                               
independent  members who  will outnumber  them, the  independents                                                               
will  be the  power brokers,  and making  that change  should not                                                               
affect  the  outcome  of  creating  a  nonpartisan  redistricting                                                               
3:50:14 PM                                                                                                                    
MARGO WARING, League of Women  Voters of Juneau (LWVJ), testified                                                               
that the  League of  Women Voters (LWV)  has long  been concerned                                                               
with  reapportionment   and  redistricting  in  the   U.S.    She                                                               
mentioned   that   she  has   belonged   to   the  national   LWV                                                               
Redistricting Task  Force (RTF) for  the three years it  has been                                                               
in existence.  She relayed that  RTF has studied the structure of                                                               
redistricting  boards in  every state  and the  improvements that                                                               
states  have  made in  their  processes.    The RTF  developed  a                                                               
position  on  redistricting, which  is  now  held  by LWV.    She                                                               
expressed  that she  supports  Representative  Gara's efforts  to                                                               
devise  a fair  way  to  redistrict Alaska  and  asked for  House                                                               
MS. WARING  said that Alaska's  redistricting process  has always                                                               
been  contentious.   She  relayed  the  following history:    The                                                               
Alaska  State   Constitution  originally  made   redistricting  a                                                               
function   of   the   governor;   the   [Alaska]   constitutional                                                               
convention,  reacting  to  the problems  other  states  had  with                                                               
conducting reapportionment in a  timely and fair manner, selected                                                               
the governor  model.   In 1964, the  U.S. Supreme  Court affirmed                                                               
the  rule of  one person  one vote.   The  redistricting maps  of                                                               
1970, 1980,  and 1990 were found  by the Alaska Supreme  Court to                                                               
be  unconstitutional.   In 1998,  the legislature  initiated, and                                                               
the public  narrowly supported the  creation of  Alaska's current                                                               
five-member  redistricting  board,  in   which  two  members  are                                                               
appointed by the  governor, one by the Speaker of  the House, one                                                               
by the  President of the Senate,  and one by the  chief justice -                                                               
all "without regard to political  affiliation."  She offered that                                                               
these words imply  that the board would  be nonpartisan; however,                                                               
in practice, nonpartisanship was not  achieved.  The maps of 2000                                                               
and 2010 were challenged in court,  and portions were found to be                                                               
unconstitutional.  The criteria cited  in the Alaska Constitution                                                               
are that  districts be  nearly equal in  population and  that one                                                               
senate  district encompass  two house  districts.   The districts                                                               
are  to be  compact  and contiguous;  they  should be  integrated                                                               
socioeconomically as  much as possible;  and attention  should be                                                               
paid to  local government boundaries  and geographic  features as                                                               
much as possible.                                                                                                               
MS.  WARING  opined  that  the  theme of  this  history  is  that                                                               
Alaskans,  aware   of  the  possibilities  of   partisanship  and                                                               
gerrymandering  and desirous  of a  nonpartisan apportionment  of                                                               
districts,  have, since  statehood, favored  approaches that  are                                                               
fair; they support the one person  one vote rule; and they do not                                                               
allow legislators to pick their  own voters.  She maintained that                                                               
Alaska has  yet to achieve this  goal.  She expressed  her belief                                                               
that Representative Gara's  effort to achieve this goal  is to be                                                               
commended.    Representative  Gara   has  studied  a  variety  of                                                               
approaches and  selected one that  can work for Alaska,  one that                                                               
provides the  kind of fair redistricting  process consistent with                                                               
the  concept of  one person  one vote,  and one  in which  voters                                                               
select legislators rather than legislators select voters.                                                                       
3:54:04 PM                                                                                                                    
CHAIR KREISS-TOMKINS announced that SSHJR 26 would be held over.                                                                
^CONFIRMATION HEARING(S)                                                                                                        
                    ^CONFIRMATION HEARING(S)                                                                                
                    CONFIRMATION HEARING(S):                                                                                
           Commissioner, Department of Administration                                                                       
3:54:32 PM                                                                                                                    
CHAIR KREISS-TOMKINS  announced that  the next order  of business                                                               
would be a  hearing for the consideration of  the confirmation of                                                               
the  appointment   of  Leslie  Ridle   as  commissioner   of  the                                                               
Department of Administration.                                                                                                   
3:54:51 PM                                                                                                                    
LESLIE    RIDLE,    Commissioner    Designee,    Department    of                                                               
Administration (DOA),  directed the committee's attention  to her                                                               
resume, included  in the committee  packet, and relayed  that she                                                               
grew  up in  Douglas,  moved  to Anchorage  in  eighth grade  and                                                               
attended high school  there, and went to college  at Oregon State                                                               
University  on a  student loan  from the  State of  Alaska.   She                                                               
mentioned  that  at  that  time, Alaska  forgave  50  percent  of                                                               
student loans for students who returned to the state.                                                                           
COMMISSIONER RIDLE relayed that she  taught seventh grade for one                                                               
year and  eighth grade for  six years at Gruening  Middle School;                                                               
she  taught English  and Social  Studies.   She  stated that  she                                                               
moved to Juneau  in her late twenties, because she  wanted to see                                                               
"government in action"; she worked  for the legislature and loved                                                               
it.   She added that  she has  been involved with  the government                                                               
and the  legislature for 27 years.   She related that  she worked                                                               
for the House for a couple  years, the Senate for a couple years,                                                               
for Governor  Knowles for eight  years, for Mark Begich  as Mayor                                                               
of  Anchorage  and  as  U.S.  Senator for  some  years,  and  for                                                               
Governor Bill  Walker.  She  pointed out  that she has  worked in                                                               
various levels of government and  two branches of government, and                                                               
she  expressed that  has  given  her a  broad  spectrum that  has                                                               
served her well in her current position.                                                                                        
COMMISSIONER  RIDLE  mentioned  that she  worked  under  [former]                                                               
commissioner  of DOA,  Sheldon Fisher  and learned  a great  deal                                                               
from  him.   She stated  that her  goal is  to move  the projects                                                               
forward  that she  and Mr.  Fisher  started.   She relayed  those                                                               
initiatives  as follows:    consolidating information  technology                                                               
(IT);  creating a  streamline system  for  state offices  through                                                               
shared  services;  negotiating   fair  contracts  for  employees;                                                               
reducing and  streamlining the  procurement process  and tracking                                                               
procurement  through  the  state  accounting  system,  Integrated                                                               
Resource   Information   System  (IRIS);   space   consolidation;                                                               
expanding customer service  in divisions such as  the Division of                                                               
Motor Vehicles (DMV) and the  Division of Retirement and Benefits                                                               
(DRB); saving  money on  healthcare for  both state  retirees and                                                               
active plan employees; and examining  the possibility of a Health                                                               
Care Authority  (HCA).  She offered  that in the next  few years,                                                               
she expects these  large projects to be "solid."   She added that                                                               
along  with  these  large initiatives  are  the  everyday  little                                                               
3:59:54 PM                                                                                                                    
CHAIR KREISS-TOMKINS  thanked Commissioner Ridle for  her service                                                               
to Alaska in her various positions.                                                                                             
4:01:13 PM                                                                                                                    
REPRESENTATIVE LEDOUX moved  to forward the name  of Leslie Ridle                                                               
to the  joint session of  the House and Senate  for confirmation.                                                               
There being  no objection, the  confirmation of Leslie  Ridle was                                                               
advanced from the House State Affairs Standing Committee.                                                                       
^Presentation: Indirect Expenditure Hearing                                                                                     
           Presentation: Indirect Expenditure Hearing                                                                       
4:01:45 PM                                                                                                                    
CHAIR KREISS-TOMKINS  announced that the final  order of business                                                               
would  be  a presentation  on  the  Department of  Revenue  (DOR)                                                               
Indirect  Expenditure Report,  presented  by Dan  Stickel and  Ky                                                               
Clark  in  DOR and  Alexei  Painter  in the  Legislative  Finance                                                               
Division (LFD).                                                                                                                 
4:02:08 PM                                                                                                                    
The committee took an at-ease from 4:02 p.m. to 4:03 p.m.                                                                       
4:03:02 PM                                                                                                                    
DAN  STICKEL,  Chief  Economist,   Tax  Division,  Department  of                                                               
Revenue  (DOR),  explained that  the  presentation  would give  a                                                               
high-level  overview  of  what an  indirect  expenditure  is  and                                                               
review the report that DOR publishes to inform the committee.                                                                   
4:04:37 PM                                                                                                                    
CHAIR  KREISS-TOMKINS expressed  his hope  that the  presentation                                                               
would inspire the  committee to explore ways  of creating greater                                                               
efficiencies   and   reducing   indirect   expenditures   through                                                               
statutory change.                                                                                                               
4:04:53 PM                                                                                                                    
KY CLARK,  Economist, Tax Division, Department  of Revenue (DOR),                                                               
began the  PowerPoint presentation,  entitled "Overview  of DOR's                                                               
Indirect Expenditure  Report, Preliminary  Report for  FY 2011-FY                                                               
2015," included  in the committee  packet.  He referred  to slide                                                               
4, entitled  "Indirect Expenditure  Report Overview,"  and stated                                                               
that the  legislation authorizing the  report was signed  on July                                                               
7, 2014.   He relayed that AS 43.05.095 requires  DOR to submit a                                                               
report  to the  Legislature biennially  on July  1 detailing  the                                                               
indirect  expenditures of  all agencies  in the  State.   It also                                                               
requires  the Legislative  Finance  Division (LFD)  to provide  a                                                               
report  to  the  legislature  on  the  indirect  expenditures  of                                                               
certain  agencies.   The first  Indirect  Expenditure Report  was                                                               
released July  8, 2014, a  day after the legislation  was signed;                                                               
the second report  was released July 1, 2016; and  the third will                                                               
be released July 1, 2018.                                                                                                       
MR.  CLARK referred  to slide  5, entitled  "Indirect Expenditure                                                               
Defined,"  and  relayed  that  an  indirect  expenditure  is  any                                                               
foregone revenue by  the state designed to  encourage an activity                                                               
to  benefit  the public  in  the  form  of a  credit,  exemption,                                                               
deduction, deferral,  discount, exclusion, or  other differential                                                               
allowance.   He gave an example  of each as follows:   An example                                                               
of a tax credit  is Alaska's oil and gas tax  credit.  An example                                                               
of an  exemption is  DOA's motor vehicle  and license  fees being                                                               
waived for disabled persons.  An  example of a discount is the 50                                                               
percent  discount on  annual food  safety and  sanitation permits                                                               
offered by  the Department of  Environment Conservation  (DEC) to                                                               
non-profit  organizations.    An  example  of  a  deduction  that                                                               
doesn't  include  costs  incurred   in  the  ordinary  course  of                                                               
business  is   the  mining   license  tax   percentage  depletion                                                               
deduction, which is  allowed by DOR for certain  types of mining.                                                               
An  example  of a  differential  allowance  is the  Pioneer  Home                                                               
Payment Assistance  Program offered  by the Department  of Health                                                               
and Social  Services (DHSS), which  allows a resident to  live in                                                               
an Alaska Pioneer Home even if not able to pay the monthly rate.                                                                
4:09:10 PM                                                                                                                    
MR.   CLARK  referred   to  slide   6,  entitled   "DOR  Indirect                                                               
Expenditure Report."   He relayed  that the most  recent indirect                                                               
expenditure report  was released  July 1,  2016, and  details 231                                                               
indirect expenditures across 11 departments  and agencies - 78 of                                                               
which  are administered  by DOR.   The  report was  a cooperative                                                               
effort  by all  departments and  agencies involved;  DOR followed                                                               
the process established for the  2014 report but with an improved                                                               
presentation, an  expanded introduction,  enhanced methodologies,                                                               
and other refinements.                                                                                                          
4:10:18 PM                                                                                                                    
MR.   CLARK  referred   to   slide   8,  entitled   "Methodology-                                                               
Internally," to delve into the  actual methodology of the report.                                                               
He relayed  that staff surveyed  all Tax Division  workgroups and                                                               
all  divisions  within DOR  to  ensure  a  complete list  of  all                                                               
indirect expenditures in  the department.  Staff  queried the tax                                                               
database to  generate information  and develop  the reports.   He                                                               
mentioned one  improvement to the  methodology -  the development                                                               
of  a consistent  definition for  "fiscal year  (FY)" -  as taxes                                                               
come in  according to  different time  schedules.   He maintained                                                               
that "nailing down"  a FY definition was  important for comparing                                                               
indirect expenditures and determining  the revenue impact for any                                                               
given  FY.    He  referred to  slide  9,  entitled  "Methodology-                                                               
Internally,"  to explain  the definition  used  for FY:   the  FY                                                               
includes any  tax returns received  during the FY and  covering a                                                               
period that  began in the FY.   For FY 2015,  the beginning dates                                                               
of the  returns are July  2014 through  June 2015.   Because some                                                               
returns  are not  received until  a  year or  a year  and a  half                                                               
later,  they were  available at  the time  of publication  of the                                                               
MR.   CLARK  referred   to  slide   10,  entitled   "Methodology-                                                               
Externally," and relayed that DOR  met with other departments and                                                               
agencies and sent out a survey  for them to report their indirect                                                               
expenditures.  Each agency examined  their operations to identify                                                               
indirect expenditures,  and a few  of the  departments identified                                                               
provisions  that  did not  actually  meet  the definition  of  an                                                               
indirect  expenditure.     He  turned   to  slide   11,  entitled                                                               
"Methodology-  Externally  cont.,"  to   point  out  examples  of                                                               
provisions  not  meeting  the definition:    the  Alaska  Housing                                                               
Finance  Corporation  (AHFC)   identified  a  potential  indirect                                                               
expenditure -  reduced loan rates;  however, because  setting the                                                               
rates  was part  of AHFC  normal operations  and not  required by                                                               
statute, AHFC is permitted, by statute, to set the rates.                                                                       
4:13:40 PM                                                                                                                    
REPRESENTATIVE TUCK  offered a situation  in which a rate  is set                                                               
and then discounted  by an agency for a certain  class of people.                                                               
He asked whether that would qualify as an indirect expenditure.                                                                 
4:14:12 PM                                                                                                                    
MR.   STICKEL  responded   that   according   to  the   statutory                                                               
definition, the differential  must be set in statute.   An agency                                                               
with a fee  setting authority may be able to  provide a reduction                                                               
to  a fee  or  rate, but  it  would not  qualify  as an  indirect                                                               
expenditure for the report.                                                                                                     
4:14:42 PM                                                                                                                    
MR. CLARK continued his review  of the examples of provisions not                                                               
meeting  the  indirect  expenditure definition  as  described  on                                                               
slide  11.   The  Department of  Commerce,  Community &  Economic                                                               
Development (DCCE)  has licensing  fees set  by statute  to cover                                                               
program costs;  reduced licensing fees for  residents versus non-                                                               
residents was determined not to  be foregone revenue, because the                                                               
fee differential does  not affect total revenue.   The University                                                               
of Alaska (UA)  awards tuition waivers to UA  employees and their                                                               
dependents;  however, because  the  waivers are  included in  the                                                               
employee  benefit  package,  they  are  not  considered  foregone                                                               
revenues.   He  relayed  another  example related  to  UA -  non-                                                               
resident versus  resident tuition  - and  explained that  UA does                                                               
not discount  the resident tuition rate,  rather the out-of-state                                                               
student is  paying a non-resident  surcharge; therefore,  it does                                                               
not constitute foregone revenue.                                                                                                
4:15:55 PM                                                                                                                    
REPRESENTATIVE  TUCK  referred  to   the  example  of  the  DCCED                                                               
licensing fees  being reduced  for residents  and stated  that he                                                               
did  not  understand  why  the  fees would  be  exempt  from  the                                                               
indirect expenditure report,  since they are set in  statute.  He                                                               
asked  for an  explanation why  the  DCCED reduced  fees are  not                                                               
considered lost revenue.                                                                                                        
MR. CLARK  answered that the fees  do not meet the  definition of                                                               
indirect  expenditure, because  the DCCED  program is  completely                                                               
funded by  the fees collected;  therefore, they are  not foregone                                                               
4:17:41 PM                                                                                                                    
REPRESENTATIVE LEDOUX  maintained that the DCCED  example appears                                                               
to be  foregone revenue and  perhaps the statutory  definition of                                                               
foregone revenue should be changed.                                                                                             
4:18:22 PM                                                                                                                    
MR. STICKEL explained  that DCCED licensing fees are  set in such                                                               
a manner that  they provide all the revenue  needed to administer                                                               
the program;  therefore, the total revenue,  which includes lower                                                               
fees from  residents and higher  fees from  non-residents, covers                                                               
the total cost of program.                                                                                                      
REPRESENTATIVE  LEDOUX   asserted  that   if  higher   fees  were                                                               
collected from  residents, the revenue  would exceed the  cost of                                                               
the program  thereby decreasing the unrestricted  general revenue                                                               
(UGF)  needed to  fund the  department.   She said,  "To me  it's                                                               
still foregone revenue."                                                                                                        
MR.  STICKEL replied  that  DOR recognizes  a  deficiency in  the                                                               
statutory definition  and, therefore, is bringing  these examples                                                               
of exceptions to  the legislature to reconsider.   Based on DOR's                                                               
interpretation  of indirect  expenditures, the  DCCED fees  cited                                                               
are not included.                                                                                                               
CHAIR KREISS-TOMKINS  expressed his  understanding that  with the                                                               
DCCED  example, covering  the cost  of  the program  is the  only                                                               
concern;   nonetheless,    it   is   "flagged"    for   committee                                                               
4:20:12 PM                                                                                                                    
REPRESENTATIVE TUCK  asked how  DMV is  different from  the DCCED                                                               
example; it charges  fees to pay for its operations  but does not                                                               
collect additional revenue.                                                                                                     
MR. STICKEL replied  that he is not prepared to  speak to the DMV                                                               
indirect expenditure but will follow up.                                                                                        
4:20:55 PM                                                                                                                    
REPRESENTATIVE  KNOPP offered  that  the difference  is that  the                                                               
DCCED licensing fees are set in  statute to raise funds to manage                                                               
a  program; with  DMV, there  are set  fees but  not a  statutory                                                               
requirement  to cover  only  the cost  of  administering the  DMV                                                               
MR.  STICKEL responded  that  Representative Knopp's  explanation                                                               
sounds plausible  and will  provide that  information.   He added                                                               
that  the goal  of the  presentation is  to provide  a high-level                                                               
4:21:44 PM                                                                                                                    
MR. CLARK moved on to  slide 12, entitled "Reported Information,"                                                               
to review the data points  requested from each department for the                                                               
report.    They  are  as  follows:   the  name  of  the  indirect                                                               
expenditure; a  brief description;  the statutory  authority; the                                                               
repeal  date, if  applicable; the  intent of  the legislature  in                                                               
enacting the  statute authorizing  the indirect  expenditure; the                                                               
public purpose  that is served  by the indirect  expenditure; the                                                               
estimated  revenue impact  of the  indirect  expenditure for  the                                                               
previous five fiscal years excluding  the fiscal year immediately                                                               
preceding the  publication of the  report; the estimated  cost to                                                               
administer  the  indirect  expenditure, if  applicable;  and  the                                                               
number   of  beneficiaries   who   benefit   from  the   indirect                                                               
expenditure.     He   added  that   along   with  this   required                                                               
information,  DOR  asks  the type  of  indirect  expenditure,  as                                                               
listed in  AS 43.05.095(d) and shown  on slide 5, as  well as the                                                               
year the indirect expenditure began or was enacted.                                                                             
4:23:50 PM                                                                                                                    
MR.  CLARK referred  to  slide 13,  entitled  "Overview of  DOR's                                                               
Indirect Expenditure  Report," and described the  contents of the                                                               
report.   The introduction  includes the  purpose of  the report,                                                               
what  is  included in  the  report,  and  an explanation  of  the                                                               
limitations   of  the   report's  methodology.     The   indirect                                                               
expenditures  are  organized  by  department  alphabetically,  by                                                               
division  alphabetically, and  grouped by  program name  for each                                                               
division, if applicable.  For  example, the Tax Division consists                                                               
of  various   program  groups  such  as   corporate  income  tax,                                                               
fisheries taxes, and mining taxes.                                                                                              
MR.  CLARK referred  to slide  14, entitled  "Future Plans."   He                                                               
stated that DOR has and  will continue to solicit suggestions for                                                               
improvements from the  Office of Management and  Budget (OMB) and                                                               
LFD, which  will be incorporated  into the July 1,  2018, report.                                                               
He stated that  DOR works with agencies to obtain  missing data -                                                               
data that is unavailable or difficult to locate.                                                                                
4:25:31 PM                                                                                                                    
MR.     STICKEL     referred     to    slide     16,     entitled                                                               
"Recommendations/Considerations," and relayed  that DOR was asked                                                               
by  the  legislative finance  committees  to  recommend areas  of                                                               
indirect expenditures that the legislature  could examine in more                                                               
detail.   Slide 16 lists five  areas that DOR identified  for the                                                               
committees to consider.                                                                                                         
MR. STICKET  turned to  slide 17, entitled  "House Bill  155 from                                                               
2015-2016," to  describe the  first area  for consideration.   He                                                               
relayed that  House Bill 155, introduced  during the Twenty-Ninth                                                               
Alaska State  Legislature (2015-2016),  would have  repealed four                                                               
specific indirect  expenditures: tobacco products  tax; cigarette                                                               
tax;  motor fuel  tax, and  large passenger  vessel gambling  tax                                                               
deduction.  He  stated that HB 96, introduced  during the current                                                               
legislative  session  [the  Thirtieth  Alaska  State  Legislature                                                               
(2017-2018)]  is like  House Bill  155 but  does not  include the                                                               
motor fuel tax repeal.                                                                                                          
MR. STICKEL  continued with slide 18,  entitled "Largest Indirect                                                               
Expenditures,"  and  offered that  if  the  state wants  to  save                                                               
money,  it  should look  at  the  list  of the  largest  indirect                                                               
expenditures.  This list includes  oil and gas tax credits, which                                                               
the  legislature  has  changed  significantly since  FY  16,  the                                                               
Mining  License  Tax  depletion  deduction,  and  Sport  Fishing,                                                               
Hunting and Trapping senior discount, among others.                                                                             
MR. STICKEL referred to slide  19, entitled "Recommendations from                                                               
Legislative Finance," which lists  indirect expenditures that LFD                                                               
recommends  be  terminated,  reconsidered,  or  reviewed  by  the                                                               
MR.  STICKEL  moved  on  to   slide  20,  entitled  "Fee  Setting                                                               
Authority,"  to  explain that  the  legislature  has granted  fee                                                               
setting  authority to  several agencies.    Examples of  agencies                                                               
with fee  setting authority  are as follows:   the  Alaska Marine                                                               
Highway   System  (AMHS)   fee  setting   authority  within   the                                                               
Department  of  Transportation   &  Public  Facilities  (DOT&PF);                                                               
tuition  setting  authority  within  UA;  and  the  rate  setting                                                               
authority within  the Alaska Housing Finance  Corporation (AHFC).                                                               
He said  that the  indirect expenditure  report does  not include                                                               
the  foregone  revenue  related   to  discounts  offered  by  the                                                               
agencies with fee setting authority.                                                                                            
4:28:32 PM                                                                                                                    
CHAIR   KREISS-TOMKINS   suggested   the   possibility   of   the                                                               
legislature  changing the  statutes so  that the  DCCED licensing                                                               
fees would  cover the cost  of DCCED administration  costs rather                                                               
than only the cost of administering the licensing program.                                                                      
MR.  STICKEL replied  that it  is possible.   He  maintained that                                                               
informing  the  legislature about  the  areas  for which  it  has                                                               
granted  agencies fee  setting  authority is  a  useful place  to                                                               
REPRESENTATIVE TUCK  suggested that DMV  fees are set  in statute                                                               
and not through fee setting authority.                                                                                          
4:30:46 PM                                                                                                                    
REPRESENTATIVE BIRCH  asked whether  DOR has  any recommendations                                                               
based on the information compiled in the report.                                                                                
MR. STICKEL answered that slides  16-20 gives ideas for different                                                               
areas  that could  be  examined, and  his  recommendation is  for                                                               
legislators to look at them.                                                                                                    
4:31:38 PM                                                                                                                    
ALEXEI  PAINTER,  Fiscal  Analyst, Legislative  Finance  Division                                                               
(LFD),  in response  to the  question about  DMV fees,  said that                                                               
those  fees are  not  set based  on the  costs  of the  programs;                                                               
therefore, an increase in the fees  could be used to replace UGF.                                                               
On the other hand, if a  statutory exemption for fees for a board                                                               
was eliminated,  it would merely  "shift two pays" but  not bring                                                               
in more  revenue to  the state, unless  the statute  was changed.                                                               
He maintained that the exemption  is not an indirect expenditure,                                                               
because  of the  way  the  statute is  written;  however, if  the                                                               
statute  were  written  to  include  any  discount  resulting  in                                                               
reduced payments by  an individual or business, then  it would be                                                               
an indirect expenditure in the report.                                                                                          
MR.  PAINTER referred  to the  PowerPoint presentation,  entitled                                                               
"Overview  of Legislative  Finance Division  Indirect Expenditure                                                               
Reports," included in the committee  packet, and relayed that the                                                               
LFD report is a follow up to the  DOR report.  He turned to slide                                                               
2, entitled "LFD Indirect Expenditure  Reports," and relayed that                                                               
DOR  prepares a  report every  two  years that  covers all  state                                                               
agencies  with indirect  expenditures; LFD  makes recommendations                                                               
to  the legislature  based  on the  data in  the  DOR report  but                                                               
focuses on  certain agencies; and  the LFD report is  released at                                                               
the beginning of  the legislative session - six  months after the                                                               
DOR report.   He explained that some of the  agencies examined in                                                               
2015,  were  not "revisited";  therefore,  the  most recent  data                                                               
examined  was FY  13  -  now five-year-old  data.    Most of  the                                                               
related recommendations may  be a useful starting  point, but not                                                               
particularly  valid.    He  mentioned   that  there  are  several                                                               
references  to  the  corporate  income tax  rate,  and  that  has                                                               
changed;  therefore, the  impact  of the  recommendations may  be                                                               
different now than at the time of the report.                                                                                   
4:34:14 PM                                                                                                                    
MR.  PAINTER referred  to  slide 3,  entitled  "Agencies in  2015                                                               
Report,"  and relayed  that in  2015, the  agencies covered  were                                                               
DCCED,  Alaska   Department  of   Fish  &  Game   (ADF&G),  DHSS,                                                               
Department of Labor & Workforce  Development (DLWD), and DOR.  He                                                               
moved on to slide 4,  entitled "Summary of 2015 Recommendations,"                                                               
to point  out the LFD  recommendations as follows:   terminate 17                                                               
provisions, which  would result in  a total known  revenue impact                                                               
of $5 million  - for 3 provisions, the impact  was unknown at the                                                               
time;  modify or  review 59  provisions; continue  37 provisions;                                                               
and for 25 provisions, LFD  could not make recommendations due to                                                               
the  provision  recently  having  been  instituted,  the  statute                                                               
recently having  been changed, or  insufficient information.   He                                                               
mentioned  that  the subsequent  DOR  report,  released in  2016,                                                               
provided  more  information  on  the  revenue  impacts  of  those                                                               
MR.  PAINTER  referred to  slide  5,  entitled "2015  Report  Key                                                               
Points," to report that one  of the 17 provisions recommended for                                                               
termination  was  repealed  under  House  Bill  247  [during  the                                                               
Twenty-Ninth Alaska State Legislature (2015-2016)].                                                                             
CHAIR  KREISS-TOMKINS   asked  for  examples  of   the  other  16                                                               
provisions  that LFD  recommended for  termination and  that come                                                               
under  the  jurisdiction  of the  House  State  Affairs  Standing                                                               
MR. PAINTER responded that many  of the provisions are related to                                                               
the  corporate   income  tax;  the  main   corporate  income  tax                                                               
structure has not  been updated since the '70s.   He offered that                                                               
some of  the assumptions at  that time  do not align  with modern                                                               
tax law,  and some provisions  reference sections of  the federal                                                               
tax law that no  longer exist.  He gave an  example:  When Alaska                                                               
created  the   corporate  income  tax  provision,   there  was  a                                                               
differential in  the federal tax  code between the  capital gains                                                               
tax and  regular income.   For  uniformity, Alaska  applied those                                                               
percentages to  its own  corporate income  tax and  taxed capital                                                               
gains  at a  lower  rate based  on the  percentages  used by  the                                                               
federal government.  The federal  government no longer engages in                                                               
that  practice;  therefore,  Alaska is  left  with  differentials                                                               
based  on the  1970s  federal tax  code.   He  opined that  these                                                               
differentials should be revisited by the legislature.                                                                           
MR.  PAINTER mentioned  that  another  provision recommended  for                                                               
termination involved  the commercial fisheries  entry commission,                                                               
but he expressed  that he was not familiar with  the details.  He                                                               
stated that the  House Finance Subcommittee for  DOR reviewed the                                                               
recommendations   in   2017   line  by   line   and   recommended                                                               
modification, repeal, or  further review of 17  of the provisions                                                               
within DOR;  these are not the  same 17 that were  recommended by                                                               
LFD for  termination, although there  is overlap between  the two                                                               
4:39:09 PM                                                                                                                    
MR.  PAINTER referred  to  slide 6,  entitled  "Agencies in  2017                                                               
Report,"  and relayed  that in  2017, LFD's  report covered  more                                                               
agencies  but  fewer  indirect expenditures,  because  the  clear                                                               
majority of  them are within  DOR.   The agencies covered  in the                                                               
2017 report  were as follows:   DOA; the Department  of Education                                                               
and Early  Development (DEED), including the  Alaska Student Loan                                                               
Corporation  (ASLC) and  the Alaska  Commission on  Postsecondary                                                               
Education  (ACPE);  DEC;  the  Department  of  Natural  Resources                                                               
(DNR);  the  Department  of Transportation  &  Public  Facilities                                                               
(DOT&PF); and  the Alaska Court  System (ACS) ("Judiciary").   It                                                               
also reviewed the  Education Tax Credit due to its  sunset at the                                                               
end  of 2018.    He added  that since  the  legislature had  just                                                               
modified the Education  Tax Credit the year before,  there was no                                                               
data yet  for the  modified credit  to be  analyzed for  the 2015                                                               
report;  therefore,  that analysis  was  completed  for the  2017                                                               
report  and  recommendations  offered  for  modification  of  the                                                               
MR.  PAINTER moved  on  to  slide 7,  entitled  "Summary of  2017                                                               
Recommendations,"  and relayed  that  LFD  offered the  following                                                               
recommendations:   the termination  of 2  provisions that  had no                                                               
known  revenue   impact;  the  modification   or  review   of  13                                                               
provisions; and the continuation of  56 provisions.  There was no                                                               
recommendation for  6 provisions.   He  explained that  the large                                                               
number of  provisions recommended for continuance  was because of                                                               
the agencies reviewed and the types of provisions.                                                                              
MR.  PAINTER  referred to  slide  8,  entitled "2017  Report  Key                                                               
Points,"  to   point  out  that  for   some  provisions,  revenue                                                               
generation is  not the goal  of the fee.   He said that  the most                                                               
prominent example of  that is someone getting a  ticket from ACS,                                                               
and often  the ticket is  waived upon correction of  the offense.                                                               
It  will   show  up  as   an  indirect  expenditure   because  it                                                               
constitutes foregone state revenue.   He maintained that the goal                                                               
of the ticket  is for the action to be  corrected; it is foregone                                                               
revenue, however, fulfills  the purpose.  For  example, the point                                                               
of fining  someone for  a broken  tail light  is not  to generate                                                               
revenue but to have the tail light fixed.                                                                                       
MR. PAINTER mentioned  that there are other  provisions for which                                                               
their  authorities set  the  fee structure.    The Alaska  Marine                                                               
Highway  System (AMHS)  reported  all the  fee  variants for  the                                                               
report, but  the legislature delegated  the authority to  set the                                                               
fee structure to  AMHS; therefore, the legislature  does not have                                                               
that  authority unless  the statute  is changed.   He  added that                                                               
departments  may   provide  information  on  fee   variants  that                                                               
technically  do not  qualify as  indirect expenditures;  however,                                                               
they are not forced to do so.                                                                                                   
4:42:43 PM                                                                                                                    
REPRESENTATIVE  LEDOUX asked  for  clarification  on the  comment                                                               
that departments do not have to provide data.                                                                                   
MR. PAINTER  responded that statute  requires the  departments to                                                               
submit data to DOR, but there  is no punishment for not doing so.                                                               
He gave  the example  of UA tuition  discounts:   these discounts                                                               
may be  on the  border of  qualifying, but  DOR has  no authority                                                               
over UA and cannot require it to do something against its will.                                                                 
REPRESENTATIVE   LEDOUX  pointed   out   that   in  statute   the                                                               
legislature said  "shall."  She  asked for a list  of departments                                                               
and agencies  that have interpreted  that to  mean "we can  if we                                                               
want to and we can't if we don't want to."                                                                                      
MR. PAINTER  answered that no  agencies with  identified indirect                                                               
expenditures have  declined to participate;  no agencies  are out                                                               
of compliance.  If there  were such agencies, LFD would highlight                                                               
it in its  report.  He added  that UA has a valid  reason for not                                                               
REPRESENTATIVE LEDOUX  posed the question:   If DOR asks  for the                                                               
data, the statute  says "shall," and the agency  has not provided                                                               
the data, "why aren't they out of compliance?"                                                                                  
MR. PAINTER replied that UA maintained  that it does not meet the                                                               
statutory requirement, therefore,  did not provide the  data.  He                                                               
stated that UA is correct in its assessment.                                                                                    
REPRESENTATIVE  LEDOUX  asked,  "Isn't  that a  little  bit  like                                                               
telling  the IRS  [Internal Revenue  Service] when  they want  to                                                               
audit you that you don't have  to provide the data because you're                                                               
not out of compliance with the tax laws?"                                                                                       
MR. PAINTER  explained that the  difference is that  the agencies                                                               
determine what  is an indirect expenditure  and what is not.   If                                                               
the   agencies  determine   that  they   do  not   have  indirect                                                               
expenditures  under  the  statute,   then  that  is  the  binding                                                               
interpretation.  He  added that if the legislature  desires UA to                                                               
participate,  then it  should change  the statute  to address  UA                                                               
matters.   He  expressed his  belief that  the sponsor  [of House                                                               
Bill  306]  did  intend  agencies  such  as  UA  to  participate;                                                               
however, the statute was not written  in such a way to accomplish                                                               
4:46:09 PM                                                                                                                    
MR.  PAINTER continued  with slide  8  by saying  that the  House                                                               
[Finance]  Subcommittees for  DEC and  DNR reviewed  the indirect                                                               
expenditures of the  two departments as recommended by  LFD.  The                                                               
subcommittees  determined  that  some   of  the  provisions  were                                                               
appropriate; for example,  the collection of one of  the DEC fees                                                               
would  cost  more money  than  would  be  generated by  the  fee;                                                               
therefore, retaining the fee exemptions made sense.                                                                             
4:46:56 PM                                                                                                                    
REPRESENTATIVE LEDOUX asked for  confirmation that within DEC and                                                               
DNR, the cost  of eliminating an exemption would  be greater than                                                               
leaving it in place.                                                                                                            
MR.  PAINTER replied  that  his  example refers  to  the DEC  fee                                                               
exemptions  for inspections  of  facilities; there  are 125  such                                                               
facilities in Alaska;  and there is a reasonable fee  that can be                                                               
charged for such  inspections.  The cost of the  fee study, which                                                               
requires  regulation  changes,   makes  the  effort  economically                                                               
unfeasible.  The  determination of the subcommittee  was that the                                                               
group paying  the fees would be  too small to make  going through                                                               
the process worthwhile.                                                                                                         
REPRESENTATIVE LEDOUX suggested that for  one year, it may not be                                                               
worthwhile,  but after  ten years,  could generate  much more  in                                                               
4:48:46 PM                                                                                                                    
REPRESENTATIVE  JOHNSON mentioned  proposed legislation  [HB 322]                                                               
changing  DEC   spill  penalties  for  residents   that  are  not                                                               
businesses and asked  whether it would be  considered an indirect                                                               
expenditure if the proposed legislation passed.                                                                                 
MR. PAINTER  expressed his belief  that the  proposed legislation                                                               
is  currently   being  held  in  the   House  Resources  Standing                                                               
Committee and added  that he has not reviewed the  bill.  He said                                                               
that his understanding  is that the waived fees  for spills below                                                               
a  certain  volume  would  fall into  the  category  of  indirect                                                               
4:50:08 PM                                                                                                                    
MR.  PAINTER moved  on to  slide  9, entitled  "2019 Report,"  to                                                               
relay that  according to statute,  LFD has no agencies  to review                                                               
for  the  next report.    Statute  provided  for agencies  to  be                                                               
reviewed in  the first two  years; in the  third year LFD  was to                                                               
review  all  the  remaining  agencies;   however,  there  are  no                                                               
agencies remaining.   He stated  that instead of a  blank report,                                                               
LFD  will  submit a  report  that  reviews  the two  tax  credits                                                               
scheduled to sunset  - the Community Development  Quota (CDQ) tax                                                               
credit  and  the  Salmon  and  Herring  Product  Development  tax                                                               
4:50:48 PM                                                                                                                    
REPRESENTATIVE TUCK  asked Mr. Painter  what the fiscal  note was                                                               
for House Bill 306.                                                                                                             
MR. PAINTER responded  that he did not know the  exact amount; he                                                               
offered  his belief  that  it  was the  equivalent  of three  DOR                                                               
positions;  the   supplemental  budget  reduced  the   number  of                                                               
positions to  one.  He  added that LFD  was given a  small amount                                                               
for contractual services with which he was hired.                                                                               
4:52:27 PM                                                                                                                    
There being no further business before the committee, the House                                                                 
State Affairs Standing Committee meeting was adjourned at 4:52                                                                  

Document Name Date/Time Subjects
HJR026 Sponsor Statement 1.23.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 Sectional Analysis 2.19.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 ver N 1.31.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 Summary of Changes 2.19.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR26 Fiscal Note DOE 2.16.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJ026 Supporting Document-Letter of Support-League of Women Voters-2.19.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 Supporting Document- Letters of Support 2.19.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 Additional Document- Powerpoint Presentation 2.19.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 Supporting Document-Article-All About Redistricting- Arizona-1.23.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 Supporting Document-Article-All About Redistricting- California-1.23.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 Supporting Document-Article-All About Redistricting- Idaho-1.23.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 Supporting Document-Article-All About Redistricting- Iowa-1.23.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 Supporting Document-Article-All About Redistricting- New Jersey-1.23.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 Supporting Document-Article-All About Redistricting-Alaska-1.23.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 Supporting Document-Article-All About Redistricting-Pennsylvania-1.23.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 Supporting Document-Article-All About Redistricting-Washington-1.23.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 Supporting Document-Article-Brennan Law Center-1.23.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 Supporting Document-Article-Detroit Free Press-1.23.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 Supporting Document-Article-NCSL Redistricting Commissions Table-1.23.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 Supporting Document-Article-NPR-1.23.18-1.23.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 Supporting Document-Article-Shining A Light-1.23.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026 Supporting Document-Article-Washington Post-1.23.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
HJR026-Supporting Document-Article-Tucson.Com-1.23.18.pdf HSTA 2/20/2018 3:15:00 PM
HJR 26
IE Hearings- DOR Powerpoint 2.16.18.pdf HSTA 2/20/2018 3:15:00 PM
IE Hearings-Legislative Finance Powerpoint 2.16.18.pdf HSTA 2/20/2018 3:15:00 PM
Confirmation Hearing- Leslie Ridle Resume 2.5.18.pdf HSTA 2/20/2018 3:15:00 PM